Abu Dhabi rental prices slip 8% in first quarter

Abu Dhabi: Rental prices in Abu Dhabi continued their downward trajectory in the first three months of this year, with declining trends continuing from last quarter, leading UAE property management company, Asteco said yesterday.

"With a high volume of new housing supply either delivered during the quarter or set for delivery in the coming months, average leasing rates for first quarter of 2011 fell eight per cent across both apartments and villas," said Asteco in its latest report.

"On the main island, turnover is slow within the lower quality buildings, where tenants are taking advantage of ‘capped' low rental agreements. Among those that have become available, rents have reduced significantly and this is a trend we expect to become more pronounced." said Elaine Jones, Asteco Property Management's chief executive.

David Dudley, Regional Director (Middle East and North Africa) at real estate investment advisory firm, Jones Lang LaSalle, agreed with the findings of Asteco.

Speaking to Gulf News by telephone, Dudley said: "This year, there will be completion of residential units in Abu Dhabi including at Al Raha Beach and Reem Island developments, which would accentuate the fall in the residential rental market. Office rents in Abu Dhabi are also set for further decline due to new supply.

"However, the fall in rents is positive for demand in Abu Dhabi as it would make the emirate more cost-competitive and is also positive for various businesses," Dudley added.

Villa rents fell eight per cent over the quarter, declining further from the five per cent decrease of fourth quarter of last year, with falls especially pronounced for lower quality villas, Asteco's findings show.

Apartment rents also continue to decline, with landlords becoming more flexible on price, with declining prices more evident at the lower quality end of the market, the report added.

However, the Asteco report says interest in good quality large villas is improving.

Villa rental rates at Golf Gardens, located next to the Abu Dhabi Golf Club, remain stable at Dh250,000 upwards for a three-bedroom villa. Additionally, in MBZ City, rents for quality villas closest to Mazyad Mall start at Dh140,000, said the report.

On the sales side, prices for villas have remained relatively stable over the last quarter, with many owners remaining naturally reluctant to sell due to market conditions.